Chile’s investment landscape is in flux as pension and mutual funds make strategic moves in the local and international markets. The latest data for August sheds light on the shifting preferences of these funds, offering insights into where their investments are flowing and what trends are emerging.
AFP allocate $187.2 million to local equities
In August, Chilean Pension Fund Administrators (AFP) displayed a notable interest in local equities, with a net investment of CLP $187.2 million. The leading contributors to this investment surge were LTM (CLP $69.7 million), BSantander ($45.6 million), and BCI (CLP $31.7 million). These investments reflect a positive outlook on the local equity market.
However, there were divestments as well, with Falabella (CLP $27.3 million), Enelam (CLP $20 million), and Embonor (CLP $6.9 million) witnessing the largest net outflows. Despite these divestments, on a trailing twelve-month (LTM) basis, AFPs demonstrated their confidence in local equities with net investments totaling CLP $1,481.4 million.
Shifts in asset allocation
Pension Funds saw a minor decrease in their exposure to Local Equity, down 18 basis points month-on-month to 7.2% of total assets under management (AUM). Simultaneously, exposure to Local Fixed Income decreased by 25 basis points to 46.2%. On the international front, the exposure to Foreign Equity increased by 48 basis points to 30%, while Foreign Fixed Income also saw an uptick of 7 basis points to 15.3%.
Mutual funds follow suit
Chilean mutual funds have been adjusting their portfolios as well, with a net investment of CLP $16.1 million in Local Equities in August. LTM (CLP $9.4 million), BCI (CLP $5.2 million), and ECL (CLP $5.0 million) were among the top investments. Conversely, divestments were seen in Cencosud (CLP $7.0 million), Mallplaza (CLP $4.6 million), and Andina-B (CLP $4.1 million). On an LTM basis, Chilean Mutual Funds demonstrated a net investment of CLP $26.3 million in local equities.
In contrast to Pension Funds, Mutual Funds slightly reduced their exposure to Local Equity, down 15 basis points to 3.3% of total AUM. Foreign Equity exposure also dipped by 23 basis points to 4.2%, along with a reduction in Foreign Fixed Income exposure by the same margin to 5.3%. However, the allocation to Local Fixed Income increased by 61 basis points to 87.1%.
Foreign investors show confidence
Foreign investors have been actively participating in the Chilean equity market, with net investments of CLP $105 million in July (latest available data). Over the LTM period, foreign investors accumulated a net investment of CLP $235 million, underscoring their confidence in Chile’s investment opportunities.
As Chilean pension and mutual funds navigate changing market dynamics, it is clear that local and international equities are in focus. These funds are carefully adjusting their portfolios to optimize returns while managing risks in a dynamic global economy.
